HELP / HECS Repayment Thresholds 2025-26
From 2025-26, HELP repayments use a marginal rate system. You only pay on income above the $67,000 threshold—not your entire income. This eliminates the old "cliff effect" and significantly reduces repayments for most borrowers.
Key changes for 2025-26
- Higher threshold: $67,000 (up from $54,435)
- Marginal rates: Pay only on income above the threshold
- No more cliffs: Crossing a threshold no longer causes sudden jumps
- 20% debt reduction: All HELP debts reduced by 20% as of 1 June 2025
How the new system works
Under the old system (2024-25), crossing a threshold meant paying a percentage of your entire income. The new system works like income tax—you only pay on the amount above each threshold.
Example: $80,000 income
Old System (2024-25)
Flat rate on total income
- Repayment rate
- 4.5%
- Calculation
- $80,000 × 4.5%
- HELP repayment
- $3,600
New System (2025-26)
Marginal rate on excess
- Repayment rate
- 15% on excess
- Calculation
- ($80,000 - $67,000) × 15%
- HELP repayment
- $1,950
Example: $120,000 income
Old System (2024-25)
Flat rate on total income
- Repayment rate
- 7%
- Calculation
- $120,000 × 7%
- HELP repayment
- $8,400
New System (2025-26)
Marginal rate on excess
- Repayment rate
- 15% on $67k-$120k
- Calculation
- ($120,000 - $67,000) × 15%
- HELP repayment
- $7,950
The old "cliff effect" is gone
Under the old system, earning $1 more could cost you hundreds in extra repayments. Here's what used to happen:
Old: $54,400 income
Just below old threshold
- HELP repayment
- $0
Old: $54,500 income
Just above old threshold
- HELP repayment
- $545 (1% of total)
Under the new system: Earning $100 over the $67,000 threshold only costs $15 in repayments (15% of $100). No more cliffs.
2025-26 HELP repayment thresholds
The new marginal system has just 4 brackets instead of 19. Repayments are calculated only on income above each threshold.
| Repayment income | Rate | Calculation |
|---|---|---|
| $0 – $67,000 | Nil | No repayment required |
| $67,001 – $125,000 | 15% | 15c for each $1 over $67,000 |
| $125,001 – $179,285 | 17% | $8,700 + 17c for each $1 over $125,000 |
| $179,286 and above | 10% | 10% of total repayment income |
Note: At $179,286+, the system switches to 10% of total income to ensure high earners still make substantial repayments.
Why the change was made
The old flat-rate system created perverse incentives. People would avoid overtime, reject bonuses, or salary sacrifice excessively just to stay below a threshold. The marginal system:
- Removes the penalty for earning slightly more
- Makes repayments proportional to your capacity to pay
- Aligns with how income tax already works
- Particularly benefits those earning $67,000–$180,000
What you need to know
The 20% debt reduction
As of 1 June 2025, all HELP debts were reduced by 20%. This was applied before indexation. If you had a $30,000 debt, it became $24,000. Combined with the new marginal rates, your total repayments over time will be significantly lower.
Salary sacrifice is less valuable now
Under the old system, salary sacrificing to stay below a threshold saved significant money. With marginal rates, there's no cliff to avoid. Salary sacrifice may still make sense for super, but it's no longer a HELP optimisation strategy.
Your employer's withholding will change
Employers will withhold less for HELP from July 2025. If you're used to getting a tax refund partly because too much HELP was withheld, that refund may be smaller (but your regular pay will be higher).
FAQ
What changed with HELP repayments in 2025-26?
From 2025-26, HELP uses a marginal rate system. You only pay on income above $67,000, not your entire income. This eliminates the old "cliff effect" where crossing a threshold caused a sudden jump in repayments.
What is the HELP repayment threshold for 2025-26?
For 2025-26, the minimum HELP repayment threshold is $67,000 (up from $54,435 in 2024-25). Below this income, no repayment is required. Above $67,000, you pay 15% on the excess amount only.
How much will I save under the new HELP system?
Most borrowers will save significantly. At $80,000 income: old system charged $3,600 (4.5% of total), new system charges $1,950 (15% of $13,000 above threshold). That's a saving of $1,650 per year.
Are HELP repayments taken from my pay?
If you have a HELP debt, your employer withholds additional tax to cover expected repayments. The actual repayment amount is calculated when you lodge your tax return, and the ATO adjusts for any over- or under-withholding.
Calculate your HELP repayment
Use the HELP calculator to see your exact repayment under the new marginal system.
Calculate HELP repayment →